It has been seven years since a comprehensive estimate of the cost of drug abuse for the United States has been constructed. The last comprehensive estimate employed the traditional cost- of-illness, or COI, approach, using data from 1992 and 1993 (Harwood et al., 1998). There is a tremendous need for an updated estimate so that the benefits of drug treatment and prevention interventions can be properly compared to the benefits of alternative uses of the scarce public dollars. There is also a need to improve upon prior COI methodology so that it considers not just the total magnitude of the problem, but the distribution of costs across different drugs and across different members of society. We propose to estimate the total economic cost of drug abuse in the United States using a traditional economics approach that distinguishes the internal costs of drug use borne by the user from the external costs this use imposes on non-users (Keeler et al., 1989;Manning et al., 1991). As part of this alternative framework, we will uniformly adopt a life-cycle approach for calculating the costs of (a) drug treatment, (b) drug-attributable health conditions, including HIV/AIDS, Hepatitis B and C, and mental illness;(c) productivity-related losses, (d) drug-attributable crime, and (e) the intangible costs of drug use/abuse. We will generate, where possible, estimates for four specific drugs of abuse (cocaine, heroin, methamphetamines and marijuana) as well as an estimate for any drug use using the same consistent methodological principals so that the internal and external burden of each drug can be easily compared and assessed in terms of its relative contribution to the total burden of disease. Finally, in addition to providing a general estimate of the total cost of drug use, this study will provide the first estimates of the economic costs associated with different stages of use. Using simulation modeling we will estimate the expected cost of initiating use, of escalating use (from experimentation to regular use), and of becoming dependent on an illegal substance. Estimates of the cost associated with these particular stages of drug use will be invaluable to researchers and policy analysts interested in evaluating the cost-effectiveness and cost-benefit of alternative drug prevention or treatment programs targeting alternative stages of drug use.